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One legal issue that will need to be resolved in
these lawsuits is whether the professional sports industry is exempt
from the FLSA's minimum wage and maximum hour requirements under Section 213(a)(3), a provision covering seasonal amusement and recreational
establishments. Under the exception, any business providing amusement
or recreational services to the public may pay its employees a
sub-minimum wage (without overtime) should one of the following two
conditions exist: either (a) the business does not operate for more than
seven months in any calendar year, or (b) the business's receipts from its six lowest revenue months in the previous year were less
than 33 1/3% of its receipts in its six highest revenue months
(e.g., the business's receipts from April-September were at least three times
greater than its receipts from October-March).

While sports franchises clearly provide amusement or recreational services, it is less certain whether they satisfy the exception's seasonality requirement. Professional sports teams hoping to claim seasonal exempt
status under the FLSA will likely have to rely on the first condition
under Section 213(a)(3). Indeed, because teams tend to receive a
significant percentage of their revenues during the off-season (from
season ticket deposits, television broadcast agreements, sponsorship deals, etc.),
they typically will not satisfy the six-month receipts requirement set forth
in Section 213(a)(3)(b). See Bridewell v. Cincinnati Reds, 155 F.3d 828 (6th Cir. 1998) "Bridewell II").

Meanwhile, courts are split regarding the status of
professional sports teams under Section 213(a)(3)(a)'s seven-month operation provision. Two of the three courts to consider the issue to date have held that sports franchises effectively operate year-round, and therefore do not qualify for the FLSA's seasonal
exception. For example, in Bridewell v. Cincinnati Reds, 68 F.3d 136 (6th Cir. 1995) ("Bridewell I"), a
group of stadium maintenance employees sued the Cincinnati Reds alleging that the team had failed to pay them overtime as required
under the FLSA.
The team asserted that it was exempt from the law because its season ran seven months (including spring
training). The 6th Circuit rejected this
argument, concluding that the team was a year-round
business. In particular, the court noted that the team's operations
extended beyond just the playing season, as evidenced by the fact that
the Reds employed nearly 120 people on a year-round basis. As a result,
the appellate court concluded that the team was subject to the FLSA.

Similarly, the Eastern District of Louisiana held that
the NBA's New Orleans Hornets were likewise subject to the FLSA in a
suit brought by former ticket sales and fan relations employees. In Liger v. New Orleans Hornets, 565 F.Supp.2d 680 (E.D. La. 2008), the court concluded that the Hornets were not exempt under Section
213(a)(3)(a) because the totality of their operations lasted more than seven
months.
In particular, the court stressed that the Hornets' season could
potentially last as long as nine months if pre-season and post-season
games were considered, while also noting that the team participated in the NBA
Draft each June. Moreover, the court emphasized the fact that the
Hornets employed 100 or more employees on a year-round basis.

However,
at least one court has held that that a professional sports franchise was
a seasonal operation exempt from the FLSA. In Jeffery v. Sarasota White Sox, 64 F.3d 590 (11th Cir. 1995), a grounds keeper for a minor league baseball team sued the franchise for unpaid overtime. The 11th Circuit rejected the challenge, holding that the team was exempt from the FLSA. In particular, the court stressed that the proper focus under
Section 213(a)(3)(a) was on the duration of the team's amusement and
recreational-related operations themselves, not the fact that some of its employees may
be employed on a year-round basis. Consequently, because the minor
league team's season only ran for five months, the court held that the franchise was not required to pay overtime. Undoubtedly hoping to take advantage of this precedent, the MLB defendants in the Senne minor league wage lawsuit
filed a motion to transfer the case from California to the
Middle District of Florida (the original site of the Jeffery
litigation) last week.

Thus, the status of
professional sports teams under the FLSA is currently unsettled. Should the courts in the pending lawsuits follow the Bridewell and Liger precedents, then it appears that the defendant professional sports franchises will be subject to the FLSA. However, if future courts were to follow the Jeffery v. Sarasota White Sox precedent, then the applicability of the exemption would likely vary by league depending on the duration
of its playing season. In fact, a court could even determine that the status of teams in the same
league differs depending upon whether the franchise qualified for the playoffs
the year before. Given the number of suits currently pending, we will likely receive additional clarification from the courts on this issue in the near future.